USD index shows positive indicators during May, led by housing; jobless claims the single negative

San Diego’s economy should see good growth at least into the first part of 2014, a monthly study by the University of San Diego says.

The study, called the Index of Leading Economic Indicators, calculates economic progress through various aspects, such as stock prices, unemployment claims, building permits and consumer confidence. It mimics a national economic report put out monthly by The Conference Board.

In May, San Diego’s economic index grew at 0.6 percent, the same rate as in April and the ninth consecutive month of expansion. In all, the index is at 126.4, the highest since its recession-related bottoming out at 100.69 in March 2009.

This time, the biggest boost came from activity in the housing market. Building permits issued for new housing construction topped 1,000 in May, the second month this year that has happened. Before 2013, you’d have to go back to 2007 to find another month that had 1,000 or more permits issued.

“As employment grows and income increases, the demand for housing increases, which leads to higher home prices,” said a statement accompanying the data, written by USD economist Alan Gin. “This in turn has led to increased building permit activity and more employment in construction and real-estate-related businesses.”

The only negative on the report, released Thursday, was what Gin described as a surge in initial claims for unemployment insurance. The unemployment rate in San Diego was at 6.7 percent in May, a low since October 2008. But the data suggests that the impact of the sequestration, the $1.2 trillion of federal budget cuts, is starting to hit San Diego’s defense-laden economy.

Here’s a look at each part of the index, and how it shaped up in May:

Building permits: Up 1.88 percent from April. Gin said residential building permits are up almost 50 percent from the same time last year, as home prices continue to climb. “That means more construction activity, so more supply coming,” Gin said, noting most of the permits were in multifamily homes. “That’s the cycle in real estate. Rising prices lead to more construction.”

Initial claims for unemployment insurance: Down 0.7 percent on the index from May (a negative change on the index means claims rose). The county received 18,772 claims for initial unemployment insurance in May, which is down about 700 from May 2012 but a jump of 2,415 over April.

Stock prices: Up 1.5 percent from April. The market had its ups and downs recently due to the Federal Reserve indicating it would scale down some of its stimulus plans by the end of the year. But in May, the market was headed up, and stock prices of San Diego based companies were no exception.

Consumer confidence: Up 0.4 percent from April. Gin said signs that the economy was improving in May boosted consumer confidence. The stock market and housing prices were on the rise, and the unemployment rate was at a more than a four-year low.

Help-wanted advertising: Up 0.3 percent from April. This was the seventh consecutive month of gains for online job ads, as measured by the state Employment Development Department.

National economy: Up 0.2 percent from April. This is the national index, as measured by The Conference Board, using the same aspects. Gin noted that the nation’s first-quarter gross domestic product was recently revised downward from 2.4 percent to 1.8 percent. He said the long-run average growth for the U.S. economy is about 3.5 percent.

The next release date for the study, put out by the USD Burnham-Moores Center for Real Estate, is July 30.